Indian Rupee to Reach Record Low of 54 by Year-End, HSBC Says
India’s rupee will weaken almost 10 percent to a record low of 54 to the dollar by the end of the year as the worldwide credit crisis curbs foreign direct investment, HSBC Holdings Plc said.
The rupee may also extend last year’s 19 percent slide as employers cut jobs overseas amid a global recession, reducing remittances from Indian workers abroad, Richard Yetsenga, HSBC’s Hong Kong-based strategist, wrote in a research report today. The U.K. bank revised its rupee forecast from 45, HSBC’s Singapore-based economist Robert Prior-Wandesforde, who co-wrote the report, confirmed in a phone call.
“We expect the slower moving remittance and FDI flows to now start to show the strain,” wrote Yetsenga. “Our estimates suggest FDI into Asia could fall to roughly zero this year. While that may be overly pessimistic, the fall in FDI should certainly be spectacular for global reasons.”
The rupee dropped 0.3 percent to 48.8425 a dollar yesterday, the lowest close since Feb. 2, according to data compiled by Bloomberg.